Debt and Preferred Equity Investments

Below is the rollforward analysis of the activity relating to our debt and preferred equity investments for the three months ended March 31, 2018 and the twelve months ended December 31, 2017 (in thousands):



	March 31, 2018			December 31, 2017
Balance at beginning of period ⁽¹⁾	$	2,114,041		$	1,640,412
Debt investment originations/accretion ⁽²⁾	233,370			1,142,591
Preferred equity investment originations/accretion ⁽²⁾	2,074			144,456
Redemptions/sales/syndications/amortization ⁽³⁾	(263,614		)	(813,418		)
Balance at end of period ⁽¹⁾	$	2,085,871		$	2,114,041


(1)	Net of unamortized fees, discounts, and premiums.


(2)	Accretion includes amortization of fees and discounts and paid-in-kind investment income.


(3)	Certain participations in debt investments that were sold or syndicated did not meet the conditions for sale accounting are included in other assets and other liabilities on the consolidated balance sheets.

Debt Investments

As of March 31, 2018 and December 31, 2017, we held the following debt investments with an aggregate weighted average current yield of 9.19%, excluding our investment in Two Herald Square, at March 31, 2018 (in thousands):



Loan Type	March 31, 2018 Future Funding Obligations		March 31, 2018 Senior Financing		March 31, 2018 Carrying Value ⁽¹⁾		December 31, 2017 Carrying Value ⁽¹⁾		Maturity Date ⁽²⁾
Fixed Rate Investments:
Mortgage/Jr. Mortgage Loan⁽³⁾	$	—	$	—	$	250,464	$	250,464	April 2017
Mortgage Loan⁽⁴⁾	—		—		26,380		26,366		February 2019
Mortgage Loan	—		—		201		239		August 2019
Mezzanine Loan^(5a)	—		1,160,000		206,230		204,005		March 2020
Mezzanine Loan	—		15,000		3,500		3,500		September 2021
Mezzanine Loan	—		147,000		24,918		24,913		April 2022
Mezzanine Loan	—		280,000		35,074		34,600		August 2022
Mezzanine Loan	—		86,580		12,701		12,699		November 2023
Mezzanine Loan^(5b)	—		115,000		12,934		12,932		June 2024
Mezzanine Loan	—		95,000		30,000		30,000		January 2025
Mezzanine Loan	—		340,000		15,000		15,000		November 2026
Mezzanine Loan	—		1,657,500		55,250		55,250		June 2027
Total fixed rate	$	—	$	3,896,080	$	672,652	$	669,968
Floating Rate Investments:
Mezzanine Loan⁽⁶⁾	—		40,000		19,999		19,982		April 2018



Loan Type	March 31, 2018 Future Funding Obligations		March 31, 2018 Senior Financing		March 31, 2018 Carrying Value ⁽¹⁾		December 31, 2017 Carrying Value ⁽¹⁾		Maturity Date ⁽²⁾
Mezzanine Loan⁽⁶⁾	—		75,014		23,346		34,947		April 2018
Mezzanine Loan	523		20,523		10,952		10,934		August 2018
Mortgage/Mezzanine Loan	—		—		19,965		19,940		August 2018
Mezzanine Loan	—		65,000		14,973		14,955		August 2018
Mortgage/Mezzanine Loan	—		—		16,980		16,969		September 2018
Mezzanine Loan	—		37,500		14,908		14,855		September 2018
Mortgage/Mezzanine Loan	391		—		23,609		23,609		October 2018
Mezzanine Loan	2,325		45,025		34,975		34,879		October 2018
Mezzanine Loan^(5c)	—		85,000		15,327		15,381		December 2018
Mezzanine Loan^(5d)	—		65,000		14,816		14,869		December 2018
Mezzanine Loan	—		33,000		26,947		26,927		December 2018
Mezzanine Loan	—		175,000		59,797		59,723		December 2018
Mezzanine Loan	—		45,000		12,192		12,174		January 2019
Mezzanine Loan	4,493		27,852		9,457		8,550		January 2019
Mezzanine Loan^(5e)(7)	795		—		15,150		15,148		March 2019
Mezzanine Loan	—		38,000		21,951		21,939		March 2019
Mezzanine Loan	—		175,000		37,307		37,250		April 2019
Mezzanine Loan	—		265,000		24,862		24,830		April 2019
Mortgage/Jr. Mortgage Participation Loan	24,587		208,094		74,944		71,832		August 2019
Mezzanine Loan	2,034		189,829		37,867		37,851		September 2019
Mortgage/Mezzanine Loan	22,570		—		146,517		143,919		September 2019
Mezzanine Loan	—		350,000		34,773		34,737		October 2019
Mortgage/Mezzanine Loan	1,792		—		66,026		—		December 2019
Mortgage/Mezzanine Loan	21,303		—		48,245		43,845		January 2020
Mezzanine Loan	1,592		568,461		77,927		75,834		January 2020
Mortgage Loan	16,038		—		83,465		—		February 2020
Mezzanine Loan	5,993		294,036		48,490		—		March 2020
Mezzanine Loan	6,654		35,112		11,539		11,259		July 2020
Mezzanine Loan	47,557		326,552		79,477		75,428		November 2020
Mortgage and Mezzanine Loan	40,798		—		90,789		88,989		December 2020
Mortgage and Mezzanine Loan	—		—		35,179		35,152		December 2020
Jr. Mortgage Participation/Mezzanine Loan	—		60,000		15,642		15,635		July 2021
Mortgage/Mezzanine Loan⁽⁸⁾	—		—		—		162,553		—
Mezzanine Loan⁽⁸⁾	—		—		—		74,755		—
Total floating rate	$	199,445	$	3,223,998	$	1,268,393	$	1,299,650
Total	$	199,445	$	7,120,078	$	1,941,045	$	1,969,618


(1)	Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.


(2)	Represents contractual maturity, excluding any unexercised extension options.

(3)

These loans were purchased at par in April and May 2017 and were in maturity default at the time of acquisition. At the time the loans were purchased, the Company expected to collect all contractually required payments, including interest. In August 2017, the Company determined that it was probable that the loans would not be repaid in full and therefore, the loans were put on non-accrual status. No impairment was recorded as the Company believes that the fair value of the property exceeds the carrying amount of the loans. As of March 31, 2018, the loans had an outstanding principal balance of $250.5 million and an accrued interest balance of $7.7 million.


(4)	In September 2014, we acquired a $26.4 million mortgage loan at a $0.2 million discount and a $5.7 million junior mortgage participation at a $5.7 million discount. The junior mortgage participation was a nonperforming loan at acquisition, is currently on non-accrual status and has no carrying value.


(5)	Carrying value is net of the following amounts that were sold or syndicated, which are included in other assets and other liabilities on the consolidated balance sheets as a result of the transfers not meeting the conditions for sale accounting: (a) $1.3 million, (b) $12.0 million, (c) $14.6 million, (d) $14.1 million, and (e) $5.1 million.


(6)	This loan was extended in April 2018.


(7)	This loan was extended in March 2018.


(8)	This loan was repaid in February 2018.

Preferred Equity Investments

As of March 31, 2018 and December 31, 2017, we held the following preferred equity investments with an aggregate weighted average current yield of 6.97% at March 31, 2018 (in thousands):



Type	March 31, 2018 Future Funding Obligations		March 31, 2018 Senior Financing		March 31, 2018 Carrying Value ⁽¹⁾		December 31, 2017 Carrying Value ⁽¹⁾		Maturity Date ⁽²⁾
Preferred Equity	$	—	$	272,000	$	144,826	$	144,423	April 2021
Total	$	—	$	272,000	$	144,826	$	144,423


(1)	Carrying value is net of deferred origination fees.


(2)	Represents contractual maturity, excluding any unexercised extension options.

At March 31, 2018 and December 31, 2017, all debt and preferred equity investments were performing in accordance with the terms of the relevant investments, with the exception of a mortgage and junior mortgage participation that were purchased in maturity default in May 2017 and April 2017, respectively, as discussed in subnote 3 of the Debt Investments table above and a junior mortgage participation acquired in September 2014, which was acquired for zero and has a carrying value of zero, as discussed in subnote 4 of the Debt Investments table above.

We have determined that we have one portfolio segment of financing receivables at March 31, 2018 and 2017 comprising commercial real estate which is primarily recorded in debt and preferred equity investments. Included in other assets is an additional amount of financing receivables totaling $88.0 million and $65.5 million at March 31, 2018 and December 31, 2017, respectively. No financing receivables were 90 days past due at March 31, 2018, with the exception of a mortgage and junior mortgage participation purchased in maturity default in May 2017 and April 2017, respectively, as discussed in subnote 3 of the Debt Investments table above.